Most people lose money from investments because of:
- Speculation and investing in higher non-systematic risk
- Market timing such as investing when market is going up (thus buying at highs) and "cutting lost" when market is coming down which is selling when lows.
- High cost. High cost of investments comes from trading fees (i.e. brokerage fees), bid-ask spread, management fee, impact cost, sales charge (for unit trusts) and soft dollar commissions.
Most people would only invest when the economy is doing well but actually they are merely buying when market is already very high. The right way is to start investing when economy is not doing well because it is when the market is at low points.
Because of all the above reasons, most people has and will lose a lot of money investing. That's why investment is difficult primarily because of the human (wrong) behavior.
Investors can hire financial advisers to help them invest. However, clients will only listen to financial advisers when the overall economy is doing well. Thus, most investors will still lose a lot of money investing even if they hire financial advisers to help them.
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